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The Philippines and the Global Outsourcing Market

Feb 1, 2008
Large scale enterprises are not the only ones who have discovered the benefits of outsourcing their business processes. In fact, because of the leaps and bounds made by the Internet, even small and medium scale enterprises have joined the outsourcing bandwagon. As a result, they are raking in millions of dollars in terms of productivity outputs and cost savings. More often that not, these companies found in developed countries outsource their business processes to developing countries, where labor costs are way lower and where there is an abundance of people with good English skills. These countries include the Philippines, which is slowly taking a bigger share of the global outsourcing market.

The global outsourcing market is divided into the Information Technology (IT) outsourcing and the Business Process Outsourcing (BPO). The former kind of outsourcing was more popular in the first boom of the dotcoms in early 2000. In this model of outsourcing, multinationals have relied on the skills of IT professionals from developing countries such as the Philippines. The IT infrastructures of the companies were managed no longer by in-house IT personnel but by people whose offices are located abroad. The development of IT applications for the use of companies was among the services being used for this purpose. In addition to this, Technical support, Data center, and the management of IT infrastructure were likewise outsourced.

During the early years of business process outsourcing, only the non-core processes were outsourced. This included call centers, accounting processes, payroll management, and even the collection of receivables and payables. Upon knowing of the limitless possibilities of outsourcing, the Philippines started out in the year 2000 with only a handful of call centers and less than 5,000 employees.

Companies in India, however, dominated the outsourcing market for both IT outsourcing and BPO. It was able to capture around $5.2 billion of the market. The Philippines, on the other hand, brought in $1 billion in 2005. Although the gap between the two countries is great, there are worldwide developments that are making the Philippines close in the gap with India. In fact, the growth rate of the BPO industry in the Philippines, particularly the call centers has been so phenomenal that the industry has been called the Philippines sunshine industry.

The global outsourcing market is not yet saturated. Actually, the industry still has a lot of room for growth and improvement. The growth rate for the market is expected to be at 43% in 2008 because of the increasing awareness among companies in the United States and Europe of the benefits that outsourcing brings. The Philippines is expected to play a bigger role in this market as the worlds outsourcing market becomes even bigger.

With its huge pool of highly literate college graduates sporting good English skills, more call centers will outsource their need for customer service and technical support to the Philippines. In addition to this, the government is providing its full support to the industry in order for it to continue growing at its phenomenal speed.
About the Author
James Stinson is Owner and Founder of Global Sky Inc. He employs a team of 50 in a high quality call center facility based in the Philippines. For more info on outsourcing your project visit: http://www.global-sky.com
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